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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH, AHEMDABAD

BEFORE HON’BLE SHRI MAHAVIR PRASAD, JM AND

HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आयकरअपील सं./ I.T.A. No.2280/Ahd/2017

(
नधारण वष / Assessment Year: 2007-08)
M/s. Shreem Packaging Products P. Ltd. ITO, Ward-4(1)(3),
5, Vasukanan, 2 n d Floor बनाम/ 2nd Floor, B Block
H/h. Nav Gujarat College Vs. Pratyakshkar Bhawan
Ashram Road, Ahmedabad-380009. Ambavati, Ahmedabad.
थायीले खासं . /जीआइआरसं . /PAN/GIR No. AACCK-9832-F
(अपीलाथ/Appellant) : (यथ / Respondent)

Assessee by : Shri Mahesh Chhajed- Ld. AR

Revenue by : Shri Lalit P. Jain-Ld.DR

सन
ु वाई क तारख/ : 02/03/2020
Date of Hearing
घोषणा क तारख /
: 04/03/2020
Date of Pronouncement

आदे श / O R D E R

Manoj Kumar Aggarwal (Accountant Member)

1. Aggrieved by confirmation of addition of Rs.75 Lacs u/s 68 for
Assessment Year [in short referred to as ‘AY’] 2007-08 by Ld.
Commissioner of Income-Tax (Appeals)-8, Ahmedabad, [in short
referred to as ‘CIT(A)’], Appeal No. CIT(A)-154/14-15 dated 16/08/2017,
the assessee under appeal before us with following grounds: -
1. The order passed by the Learned CIT(A) is against law, equity and justice.
2. The Ld. AO has erred in law and /or facts in upholding validity of assessment when
no addition is made in regards to reason for which assessment is reopened.
3. The Ld. CIT(A) has erred in law and on facts in upholding addition made by the Ld.
AO u/s.68 of the I.T. Act of Rs.75,00,000/-
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08

The assessee filed an application for admission of additional grounds u/r

35A which read as under: -
The reasons recorded for reopening of assessment does not reflect that the income
having escaped assessment Is more than rupees one lakh or likely to be more than
rupees one lakh as laid down under the provisions of s. 149(1)(b) of the Act as
reopening is made beyond four years hence reopening of assessment is not valid
and bad in law.

Since additional ground is merely a legal ground and do not require

appreciation of new facts, the same is admitted and taken on record in
terms of decision of Hon’ble Apex Court rendered in National Thermal
Power Corporation Ltd. V/s. CIT. (229 ITR 383).

2. We have carefully heard the legal submissions made by Ld. AR.

We have also heard the arguments on merits. We have deliberated on
judicial pronouncementS as cited before us. Our adjudication to the
subject matter of appeal would be as given in succeeding paragraphs.
From the record, it appears that the name of the assessee has
undergone change from M/s Kottenz Personal Care Products Pvt. Ltd. to
M/s. Shreem Packaging Products P. Ltd.

3.1 Facts on record would reveal that the assessee being resident
corporate assessee stated to be engaged in manufacturing of corrugated
boxes was subjected to an assessment u/s 143(3) r.w.s. 147 on
30/01/2015 wherein the assessee was saddled with addition of Rs.75
Lacs u/s 68.
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
3.2 Pursuant to receipt of certain information from DGIT (Investigation),
Mumbai, it transpired that the assessee received accommodation entries
aggregating to Rs.75 Lacs from 3 entities of Shri Praveen Kumar Jain.
These entities were (i) Kush Hindustan Entertainment Ltd.; (ii) Olive
overseas Private Limited; & (iii) Yash-v-Jewels Ltd. Accordingly the case
was reopened as per due process of law vide issuance of notice u/s 148
dated 27/03/2014. In response, the assessee filed return of income on
26/05/2014. The original return was filed on 29/10/2007 which was
processed u/s 143(1). The notices u/s 143(2) & 142(1) were issued in
due course wherein the assessee was called to file requisite information
/ documentary evidences in support of stated transactions.

3.3 In defense, the assessee filed Income Tax Acknowledgements,

Board Resolution and copies of Share Application form. In later
submissions, the assessee submitted copies of Balance sheet,
confirmation, counter-confirmation, bank statements, Form No.2-return
of allotment etc. of investor entities. A copy of affidavit made by Shri
Praveen Kumar Jain denying accommodation entries with assessee was
also filed. Relying upon various judicial pronouncements, it was
submitted that the onus as placed by Sec. 68 was discharged. This onus
was to prove the identity of the investor entities, their respective
creditworthiness and genuineness of the transactions. The assessee
also assailed reopening by submitting that it was not based on any
material on record.
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
3.4 However, these submissions could not convince Ld.AO who, inter-
alia, observed that the assessee failed to produce any of the directors of
the stated entities and therefore, a conclusion was to be drawn that
these entities were dummy entities being operated by Shri Praveen
Kumar Jain. Reliance was placed on the decision of Hon’ble Apex Court
in Durga Prasad More 82 ITR 640 & Sumati Dayal 214 ITR 801 to
conclude that looking at surrounding circumstances, the share
application money against allotment of preference share was not
genuine transactions. The retraction affidavit of Shri Praveen Kumar Jain
was termed as mere after-thought. Therefore, it was held that the
assessee failed to demonstrate the fulfillment of primary ingredients of
Sec. 68 and therefore, the said amount of Rs.75 Lacs was added to the
income of the assessee.

4. The Ld. CIT(A) dismissed the legal grounds raised by the assessee
and also confirmed the quantum additions primarily by relying upon the
decision of this Tribunal rendered in Pavankumar M.Sanghvi V/s ITO
2017 81 Taxman.com 308). Aggrieved the assessee is in further appeal
before us.

Adjudication on legal submissions:

5.1 At the outside, we deem it fit to appreciate the reasons recorded by
Ld. AO to reopen the assessee’s case, in following manner: -
The assessee company has filed its Return of Income electronically on 29.10.2007
declaring total income of Rs. NIL. The case was processed u/s 143(1) of the I. T. Act
on 21 .03.2009. The assessee is engaged in the packaging materials.
2. This Office has received the information from the DGIT(Inv.), Unit-III(2), Mumbai
vide letter dated 07.03.2014, it is informed that a search and survey was conducted
in the case of Shri Pravinkumar Jain & his Group on 01.10.2013 at the various
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
business premises of the assessee. During the course of search conducted, it is
revealed that Shri Pravinkumar Jain himself is a Director in few concerns. However
Through dummy Directors/Proprietors to control, operates and manages a large
number of concerns. All such concerns are not carrying out any genuine business.
All such concerns are indulged in the activity of providing entries only. Shri
Pravinkumar Jain is engaged in providing accommodation entries of various nature
like bogus unsecured loans, bogus share application and bogus sales etc.
3. In the following companies, which arc controlled by the Shri Pravinkumar Jain in
which the assessee company has invested total Rs.75,00,000/- during the F.Y.
2006-07. The details are as under: -
(i) Kush Hindustan Entertainment Ltd. - Rs, 25.00.000/-
(ii) Olive Overseas P. Ltd. - Rs. 25,00,000/-
(iii)Yash -V- Jewels Ltd. - Rs, 25,00,000/-

4. In view of the above, I have reason to believe that income chargeable to tax has
escaped assessment by reason of failure on the part of the assess to disclose fully
and truly all material facts necessary for his assessment for the assessment year
under consideration.

The Ld. AR, by way of additional ground, asserted that the stated
reasons does not reflect the fact that income having escaped
assessment is more than rupees one lakh or likely to be more than
rupees one lakh as laid down under the provisions of Sec.149(1)(b) of
the Act as reopening was beyond four years and therefore, the
reopening was bad in law in terms of certain judicial pronouncements.

5.2 Upon careful consideration, the plea raised by Ld. AR do not

convince us since the quantum of escapement of income has already
been explicitly mentioned by Ld. AO in para-3. Not only aggregate
amount but entity wise amount has been indicated. Therefore, separate
recording of that fact, in our opinion, was not necessary. The Ld. AR has
relied on the decision of SMC bench of this Tribunal in Sumer
S.Sanghvi V/s ACIT (ITA No.1424/Ahd/2016 dated 06/02/2020) in
support of the submissions. However, after going through the reasons
recorded in that case, which are extracted a para-7 of the order, it is
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
quite discernible that the quantum was nowhere mentioned in the
reasons and therefore, the said decision is clearly distinguishable. That
decision draw strength from the decision of Hon’ble Gujarat High Court
rendered in Bakulbhai Ramanlal Patel V/s ITO (56 DTR 212 Guj)
which has similar factual matrix and therefore, not applicable to the fact
of the present case.

5.3 Another plea raised by Ld. AR is the fact that, as stated in para 3 of
the recorded reasons, the assessee has not invested any amount in any
of the entities rather the 3 entities made investment in the assessee and
therefore, for the stated reason alone, the assessment proceedings are
liable to be quashed. However, the said plea also does not convince us
in view of factual matrix as clearly brought down on record by Ld. AO in
para-2. Therefore, quashing reassessment proceedings merely on that
reason alone would be too technical in nature and we are not convinced
with the same.

5.4 Proceeding further, we find that original return was processed u/s
143(1) and the only requirement under law to initiate reassessment
proceeding against the assessee was that Ld.AO had reasons to believe
that certain income had escaped assessment. We find that Ld.AO was
clinched with specific information while forming such reasons which
suggested possible escapement of income in the hands of the assessee.
Nothing more, in our opinion, was required at that stage to reopen the
assessee’s case and formation of a prima-facie opinion was sufficient to
trigger the reassessment proceedings.
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
5.5 Therefore, not convinced with legal grounds / submissions made by
Ld. AR, we dismiss the same and hold that reassessment proceedings
were validly initiated against the assessee. Ground Nos. 1 to 2 as well as
additional ground stands dismissed.

Adjudication on Merits
6. So far as the merit of the case are concerned, we find that the onus
to demonstrate the fulfilment of primary ingredients of Sec.68 was on
assessee. This onus was to prove the identity of the investor entities,
their respective creditworthiness and genuineness of the transactions.
This onus was more in the factual matrix which led to trigger
reassessment proceedings against the assessee. Upon perusal of
documents on record, we find that the assessee had furnished Income
Tax Acknowledgements of the investor entities, Board Resolutions
passed by those entities to make investment in the assessee entity,
copies of Share Application form, audited annual accounts and the bank
statements of investor entities. There are no immediate cash deposits in
the bank accounts of these entities before making investment in the
assessee entity. The allotment was authorized by Board Resolution of
the assessee and Return of Allotment in Form No.2 was filed with
appropriate authorities. Upon perusal of these documents, it could be
said that the assessee had discharged the primary onus of Sec.68 and it
was incumbent on the part of Ld.AO to rebut assessee’s claim. However,
we find that no material has been brought on record to suggest that any
cash got exchanged between the assessee and the investor entities and
the assessee’s unaccounted money was channelized in the books in the
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ITA No.2280/AHD/2017
M/s Shreem Packaging Products Private Limited
Assessment Year :2007-08
garb of share application. Mere non-appearance of directors alone could
not support the impugned additions in the hands of the assessee.
Therefore, concurring with the stand of Ld.AR, in this regard, we delete
the impugned additions u/s 68. Ground No.3 stand allowed.

7. Finally, the appeal stands partly allowed in terms of our above

order.

Order pronounced in the open court on 04/03/2020

Sd/- Sd/-
(Mahavir Prasad) (Manoj Kumar Aggarwal)
या!यक सदय / Judicial Member लेखा सदय / Accountant Member

Ahmedabad; Dated :04/03/2020

SS, PS

आदे शक
तलपअेषत/Copy of the Order forwarded to :

1. अपीलाथ/ The Appellant
2. यथ/ The Respondent
3. आयकरआयु-त(अपील) / The CIT(A)
4. आयकरआयु-त/ CIT– concerned
5. .वभागीय!त!न1ध, आयकरअपीलयअ1धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड7फाईल / Guard File

आदे शानस
ु ार/ BY ORDER,
// TRUE COPY //

उप/सहायक पंजीकार (Dy./Asstt.Registrar)

आयकरअपील"यअ#धकरण, मुंबई / ITAT, Ahmedabad.